Sankyo Co., Ltd. · TSE:6417
Sankyo — Bank of America Merrill Lynch Japan Conference 2012
31 slides from Sankyo's conference presentation, Sep 4, 2012
Slide 1: Presentation on Bank of America Merrill Lynch Japan Conference 2012
Presentation on Bank of America Merrill Lynch Japan Conference 2012 SANKYO CO., LTD. 1st Sec. of the TSE #6417 Current Price: Y3,755 (August 27, 2012) S Shares O Outstanding: 97.5 9 million Market Cap: Y366,479 million Masahiko Komuro Office Manager of IR Office, Corporate Planning Division The Comp
Slide 2: Company Overview
Company Overview
Slide 3: Company Overview
Company Overview SANKYO CO., LTD. 1st Sec. of the TSE #6417 Development, Manufacture, and Sales of Pachinko and Pachislot Machines 3 Brands Structure 2
Slide 4: Stock Information
Stock Information Price 3 755 3,755 (August 27, 27 2012) M k t Cap Market C 366 479M 366,479M Trailing P/E (ttm) 17.40 Forward P/E (1 yr) 10.03 Price/Book (mrq) 0.91 Forward Annual Dividend Rate 150.00 Forward Annual Dividend Yield 4.00% Currency in JPY Payout Ratio 40.05% 3
Slide 5: Analyst Coverage
Analyst Coverage Mr. Souichiro Fukuda Mr. Satoshi Tanaka Mr. Satoru Kikuchi Mr. Masanori Minami Mr. Yusuke Maeda Mr. Takeshi Koyama y Analyst y coverage g Mr Yuta Sakurai Mr. Mr Masashi Morita Mr. Mr Eiji Maeda Mr. by 9 firms Source: QUICK 4
Slide 6: Focused on Game Machine-related Businesses
Focused on Game Machine-related Businesses Sales Composition 15.0% 14.0% 71.0% Pachinko Machines Pachislot Machines Ball Bearing Supply Systems and Others 5
Slide 7: Positioning of the Brands
Positioning of the 3 Brands Creative Broad appeal Content-oriented Specification-oriented 6
Slide 8: Prosper with the Pachinko Industry
Prosper with the Pachinko Industry 2012 2001 1992 1980 1975 CR Fever Wide Powerful Fever Powerful III Fever Open Tulip CR Fever Koda Kumi III Love Romance 7
Slide 9: Debut of Neon Genesis Evangelion in 2004
Debut of Neon Genesis Evangelion in 2004 7p pachinko titles: 1,303,000 , , units 2012 2012 6 pachislot titles: 422,000 units 2004 2005 8
Slide 10: Industry Trend
Industry Trend
Slide 11: 30% of the Leisure Market
30% of the Leisure Market Leisure Market 67.9 trill. yen Pachinko player population: 16.7 million 19 3 trill. 19.3 t ill yen One in every 6.4 of Japan’s population l ti aged g d 18 or older ld plays l pachinko or pachislot Pachinko Rental Ball Fee Source: Japan Productivity Center for Socio-Economic
Slide 12: Structure of Pachinko Industry
Structure of Pachinko Industry Pachinko Rental Ball Fee Gross Profit of Parlor 19.3 trill. yen 3.0 trill. yen Prize Other Expenses (85%) Operating Income (2/3) Costt off C Size of Game Machine Purchase Machine Market Gross Profit (1/3) 1.2 trill. yen ((15%)) 11
Slide 13: Size of Pachinko Machine Market
Size of Pachinko Machine Market 985 921 886 825 800 CY2012 Expected to be flat or decline 3 339 3,339 3 332 3,332 slightly 2,900 2,602 2,500 Market Size (bn. yen) No. of Sales for Pachinko Machines (thou. units) CY2008 2009 2010 2011 2012E Source: Yano Research Institute 12
Slide 14: Share of Pachinko Machine Market (unit basis)
Share of Pachinko Machine Market (unit basis) 30% 25% Sanyo 20% Kyoraku 15% SANKYO Sammy 10% Newgin 5% 0% CY2007 2008 2009 2010 2011 Source: Yano Research Institute 13
Slide 15: Size of Pachislot Machine Market
Size of Pachislot Machine Market 375 390 286 242 225 CY2012 Slight decrease following strong growth 1,259 1,200 913 979 765 Market Size (bn. yen) No. of Sales for Pachislot Machines (thou. units) CY2008 2009 2010 2011 2012E Source: Yano Research Institute 14
Slide 16: Share of Pachislot Machine Market (unit basis)
Share of Pachislot Machine Market (unit basis) 35% Sammy 30% 25% 20% Yamasa 15% Universal 10% SANKYO 5% Daito 0% CY2007 2008 2009 2010 2011 Source: Yano Research Institute 15
Slide 17: Current Situations and Initiatives
Current Situations and Initiatives
Slide 18: 5-year Financial Highlights
5-year Financial Highlights Consolidated: mill. yen FY 3/2008 FY 3/2009 FY 3/2010 FY 3/2011 FY 3/2012 Net Sales 280 511 280,511 187 877 187,877 222 673 222,673 201 606 201,606 173 682 173,682 Pachinko Machines 217,955 133,195 180,471 149,876 123,353 Pachislot Machines 40,511 33,598 23,698 30,316 24,
Slide 19: Stable Operating Income Ratio
Stable Operating Income Ratio ((24.3% on Average g for the Past 5 yyears)) Net sales 100.0% Cost of sales 52.7% Advertisement expenses 4.2% S l commission Sales i i 6.4% 6 4% R&D expenses 6.8% SG&A expenses p 23.0% Salaries and wages 1.9% Other 3.6% Operating income 24.3% 18
Slide 20: SANKYO's Ideal Profile
SANKYO’s Ideal Profile Forging ahead in the Market No.1 Market Capitalization No.1 Market Share No.1 Popularity among Players FY 3/2012 19
Slide 21: FY 3/2013 Forecast (Highlights)
FY 3/2013 Forecast (Highlights) FY 3/2012 FY 3/2013 YoY Net Sales 173,682 210,000 +36,318 +20.9% Pachinko Machines 123,353 142,700 Pachislot Machines 24 282 24,282 49 300 49,300 Ball Bearing Suppry Systems 24,442 17,400 Other Business 1,603 600 Operating Income 40,315 50,000 +9,685 +24.0% Recurring
Slide 22: Key Issues for FY 3/2013
Key Issues for FY 3/2013 1 Successful introduction of the flagship pachinko model 2 Enhanced presence in the pachislot market 3 Early establishment of the 3-brand structure No. 1 popularity among players 21
Slide 23: Price of Second-hand Pachislot Macross Frontier Machines Remained High
The Price of Second-hand Pachislot Macross Frontier Machines Remained Highg JPY 500,000 Pachislot Macross Frontier 400,000 Evangelion-- the Heartbeat of Life 300,000 Mumu World DX II Average of the top 50 models 200,000 100,000 0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Source: SANKYO 22
Slide 24: Dividend Policy
Dividend Policy Dividends per Share JPY 3/1992 25 FY 3/2013 Forecast Y150 Y150.00 00 3/1993 - 3/1995 30 (Payout ratio 40.05%) 3 1996 - 3/1997 3/1996 3 199 40 3/1998 50* 3/1999 - 3/2004 40 3/2005 / 70 N di No dividend id d cutt since i the th listing li ti 3/2006 - 3/2007 100 Commitment to 25% payout
Slide 25: Appendix
Appendix OFVEKIOIIYVavy
Slide 26: Business Results for the 1st Quarter of FY3/2013
Business Results for the 1st Quarter of FY3/2013 FY 3/2013 Forecast FY 3/2011 FY 3/2012 連結：百万円 Consolidated: million yen Q1 YoY 6 Months Full Year Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 売上高 売 高 Net Sales 22,864 -8,777 73,000 210,000 51,124 67,378 32,806 50,298 31,641 39,894 30,666 71,481 パチンコ Pachinko 10,895 -7,24
Slide 27: Pachinko Machines Business
Pachinko Machines Business FY 3/2013 Forecast FY 3/2011 FY 3/2012 連結：百万円 Consolidated: million yen Q1 YoY 6 Months Full Year Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 売上高 Net Sales 10,895 -7,240 48,100 142,700 46,069 58,986 19,876 24,945 18,135 31,792 17,391 56,035 営業利益 Operating Income 421 -4,215 11,600 39,200 14,46
Slide 28: Pachislot Machines Business
Pachislot Machines Business FY 3/2013 Forecast FY 3/2011 FY 3/2012 連結：百万円 Consolidated: million yen Q1 YoY 6 Months Full Year Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 売上高 Net Sales 5 705 5,705 -2 683 -2,683 16 600 16,600 49 300 49,300 1 990 1,990 2 213 2,213 5 469 5,469 20 644 20,644 8 388 8,388 2 486 2,486 1 705 1,
Slide 29: Gross Margin/Operating Margin
Gross Margin/Operating Margin FY 3/2013 Forecast FY 3/2011 FY 3/2012 連結 Consolidated Q1 YoY 6 Months Full Year Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 売上総利益率 Gross Margin 47.7% +0.5pt 53.4% 50.0% 52.2% 52.7% 46.5% 45.2% 47.2% 44.3% 45.8% 53.0% 営業利益率 Operating Margin 5.3% -13.6pt 17.8% 23.8% 26.3% 30.0% 18.4% 24.3%
Slide 30: Game Machine Market
Game Machine Market 全日遊連加盟パーラーの状況 4,000 Situation of Parlors that Are Members of Zennichiyuren 営業中の店舗数 No. of outlets currently in operation 3,500 3,339 3,332 11,336 11,318 11,337 11,318 11,305 11,314 11,332 11,303 11,268 11,269 11,258 11,227 3,173 3 000 3,000 3,158 3,163 , 3,076 3 107 3,107 2,954 2
Slide 31: Good luck. Good life.
Good luck. Good life. sANCKYO
Sankyo — Bank of America Merrill Lynch Japan Conference 2012 on 6ix